The responses to Steve Jobs' feint are coming in fast and furious. RIAA's Mitch Bainwol correctly pointed out the consumer frustration is with FairPlay not being licensed to others. Warner Music's Edgar Bronfman, Jr., called Jobs on his attempt to conflate DRM with interoperability. And it doesn't sound like Jobs' move is helping him with Norway, either.

So much has been said on this topic I hesitate to add to it. But yesterday morning I penned an op-ed on the controversy. Seeing how much solid commentary there is out there, it seems silly to attempt newspaper placement, so I will put it below the jump for those who can't get enough on this subject.

On Tuesday Apple CEO Steve Jobs picked up the snow globe that is the U.S. copyright debate and gave it a pretty hard shake. The man whose company has created a walled garden of iTunes songs playable only on iPods through proprietary protection software wrote on a company web site that he'd love to abandon such protection entirely.

That's a smart move. France passed a law last year giving its government the authority to force Apple to make iTunes and iPods interoperable with other systems. Norway has ordered Apple to interoperate by the fall. Jobs has shifted the pressure to the music labels, many of which have European ownership.

The music industry didn't force Jobs to create this walled garden, of course; the company was simply emulating its computer industry model, where key elements such as the operating system are kept proprietary and not licensed to others. The small market share for Apple computers spares Jobs any legal threat of forced sharing.

But iTunes controls 80% of the download market, and iPods are similarly dominant in the MP3 player space. Faced with pressure on that from foreign legislatures, Jobs proposes abandoning digital rights management entirely. The iPod already plays unprotected MP3 files. If that was all that was sold online, Apple would do just fine. It has the iTunes brand, it has the market share, and competitors couldn't differentiate on product because the MP3s would be identical. They could only compete on price, but Apple has demonstrated it has the market share to set music download prices. The labels wanted flexible pricing in the last negotiating round; Jobs wanted a flat rate of 99 cents per song. The compromise? A flat rate of 99 cents per song.

Jobs is a savvy businessman and is acting in the best interest of his company and its shareholders. But he's also a brilliant PR tactician, and he has simultaneously managed to point the finger at the music labels and suggest they are the cause of consumer discontent.

It is true that the major labels want so-called DRM on their songs, although they don't stipulate any particular standard. They have the disadvantage of customer expectation that comes from unprotected CDs, a technology that reached the market years before computers with CD burners and ripping software. But it's easy to forget that under copyright law, creators are given full rights over their creation. After that they can choose which rights to assign to others. DRM -- digital rights management -- is merely an attempt to manage digital rights.

Copyright critics point out that the Constitution empowers Congress to set limits on copyright. This is true. They further suggest this means the rights granted in the so-called "Progress Clause" are not on the level of property rights. This is not true. All property rights can be limited by law; just ask the Kelos. Beyond the eminent domain issue, I cannot open up a pig farm in my back yard in a neighborhood zoned for residential use, nor can I feed a nearby stream with toxic runoff. Congress has changed property rights law many times over the years. Congress has also changed creators' rights many times, but that can be a good thing, such as in 1976 when they made clear that copyright was granted automatically without requiring registration.

A creator creates. She now has complete rights to that creation. Let's say she's written a song. She can stick that sheet music in the bottom of her piano bench and never again let it see the light of day. Or she can enter the market and began doling out rights. Our system is complicated by various licensing regimes that can restrict the negotiating power of that artist, but ultimately she assigns some rights and retains others, and is compensated in the process.

Steve Jobs knows that he is dependent on creators to stock his iTunes store, and he knows they hold the rights. He can't simply stop using DRM; in the rights agreement he signed with the major labels, he committed to using DRM, and that use has not prevented him from building substantial market share. He should also understand about the need to maintain some control over one's creation. For evidence of Jobs' level of understanding, just ask any computer vendor that has ever sought a license for an Apple operating system.

posted by Patrick Ross @ 2:55 PM | DRM & Watermarks, etc.

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